Short answer: In 99% of all cases, yes, you have to keep paying your condominium association or homeowners’ association dues. Read on for an explanation of why it is a good idea to keep paying your Illinois condominium association dues even if your unit is in foreclosure.
What happens if you fail to pay your Illinois condominium association dues?
Illinois condominium associations have extraordinary remedies available to them under the Illinois Condominium Property Act. Homeowners’ associations have similar rights and remedies against you for non-payment of association dues under the Illinois Common Interest Community Association Act, but this article will focus on condos.
One remedy condo associations have for unpaid common expenses, fines or assessments is to place a lien on your condo. See 765 ILCS 605/9(g)(1). But you don’t care if a lien is imposed on your unit because you are going to lose it in foreclosure anyway, right? Wrong, because the lien is not their only recourse. They will sue you.
Your condominium association can and will sue you for past-due assessments and evict you from the condo.
Article IX of the Code of Civil Procedure pertains to actions in Forcible Entry and Detainer, which is what we call eviction lawsuits in Illinois. The Forcible Entry and Detainer provisions grant condominium associations essentially all of the remedies that a landlord would have against a tenant who fails to pay rent. Those remedies include the right to evict the condominium unit owner and to obtain a monetary judgment against the unit owner. The money judgment can then be collected through all means available to judgment creditors including wage garnishment, bank account seizure, and forcing you to sell property. Money judgments are not a lot of fun.
But bankruptcy will save you from your condominium association, right? Well, maybe. . .
Congress has specifically exempted post-petition condominium association debts from discharge in 11 U.S.C. § 523(a)(16). What this means is that under normal circumstances and if you are otherwise eligible to have your debts discharged in bankruptcy, you can discharge your obligation to pay condominium association dues that arose prior to your bankruptcy filing. However, you are still personally liable for condominium association dues that arose after they obtain relief from the bankruptcy court.
Then how do I end my obligation to pay my condominium association?
It’s easy in principle and difficult in practice. Your obligations under the Illinois Condominium Property Act arise because of your status as a “Unit Owner,” which basically means that you own part or all of the property. You will not be free of your obligation to pay condominium association assessments, fines and fees until you cease having an ownership interest in the property. This requires that a deed transferring the property to someone else is executed and recorded at the County Recorder’s office.
Here’s the problem unique to foreclosures. In many cases, the foreclosing mortgage company is going to take its sweet time completing the foreclosure case. Even if you have completely conceded and waived a white flag, it could be months or years until the foreclosure is completed. Until that happens and the foreclosure deed is recorded, you will continue to have an obligation to pay condominium association dues. It is a terrible situation to get yourself into, and if you time it incorrectly the bankruptcy laws will provide you no relief.
This is the value of an experienced bankruptcy and foreclosure defense attorney.
The timing of your bankruptcy (if you intend to file it) is especially important if you live in a condo in Illinois that is in foreclosure. The interplay of the half-dozen laws I cited above will determine whether it is better for you to file bankruptcy at the outset of your foreclosure case or whether you should wait until the very end. I have advised several Illinois condominium owners in foreclosure about the correct strategy for a bankruptcy filing. I offer all prospective bankruptcy and foreclosure defense clients a no-obligation, free initial consultation to discuss their case.